Middlebury

 

Retail Redlining? Are Gasoline Prices Higher in Poor and Minority Neighborhoods?

Caitlin Knowles Myers, Economics

Authors: Assistant Professor of Economics, Caitlin Knowles Myers, and Middlebury students Grace Close, Laurice Fox, Madeline Niemi, and John William Meyer

Forthcoming in Economic Inquiry

Description:  Higher retail prices are a frequently cited cost of living in poor, minority neighborhoods.  However, the empirical evidence, which primarily comes from the grocery gap literature on food prices, has been mixed.  Assistant Professor of Economics Caitlin Knowles Myers and students in her winter term 2009 class on discrimination, with funding from a Middlebury College Ada Howe Kent grant, collected and compiled data from a variety of sources to explore the relationship between neighborhood characteristics and retail gasoline prices.   They found that gasoline prices do not vary greatly with neighborhood racial composition, but that they are higher in neighborhoods where many households have incomes below the poverty line.   The higher prices in poor neighborhoods are explained by higher operating costs there and by the ability of stations to price discriminate because it is relatively difficult for poor consumers to search for lower prices.